💡How do we solve it?
Smart legal contracts provide a standardised way to maintain compliance, improve security and automate transactions.
Compliance
Smart legal contracts are designed to comply with existing legal and regulatory requirements. By encoding the terms of a contract into code, the contract is programmed to enforce compliance with relevant laws and regulations, such as know-your-customer (KYC) and anti-money laundering (AML) requirements. This ensures that tokenized assets are issued and traded in a legally compliant manner.
Smart legal contracts differ from ordinary cryptocurrency smart contracts because they are legally-binding in their own right and can be enforced in courts of law. While ordinary cryptocurrency smart contracts can be used to execute certain actions automatically when certain conditions are met, they are not typically legally enforceable contracts in and of themselves.
Smart legal contracts contain the same key elements as traditional legal contracts, such as offer, acceptance, and consideration, and are designed to comply with existing legal and regulatory frameworks.
Lawyer friendly: Smart legal contracts are lawyer-friendly, meaning they can be printed and read the same way as traditional contracts are read - in plain English!
Standardisation
Smart legal contracts help to standardise the process of tokenizing real-world assets. By using a common set of coding standards and templates, companies can ensure that their tokens are interoperable and compatible with other tokens in the market. This can help to create a more liquid and efficient market for tokenized assets.
Security
Smart legal contracts enhance the security and custody of digital assets by using a combination of cryptography and blockchain technology. By encoding the terms of a contract into code and storing it on a decentralized blockchain, smart legal contracts are tamper-proof and are a secure system for managing digital assets.
Automation
Smart legal contracts can automate many of the processes involved in contract management, such as payment processing and dispute resolution. By using pre-programmed rules and conditions, smart legal contracts can automatically execute certain actions when certain criteria are met. This can help to reduce the need for intermediaries and streamline business operations.
For example: In the case of real world assets, a smart legal contract can connect to a land registry database and update the title holders upon sale of a tokenised part of a property. In this way, the smart legal contract directly ensures that the ownership of the tokenized asset is reflected in the real world.
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